Cogent Communications Reports Second Quarter 2014 Results and Increases Regular Quarterly Dividend on Common Stock

   Cogent Communications Reports Second Quarter 2014 Results and Increases                   Regular Quarterly Dividend on Common Stock  PR Newswire  WASHINGTON, Aug. 7, 2014  WASHINGTON, Aug. 7, 2014 /PRNewswire/ --  Financial and Business Highlights    oService revenue for Q2 2014 of $94.6 million – an increase of 10.3% from     $85.8 million for Q2 2013 and an increase of 1.8% from $92.9 million for     Q1 2014   oCogent approves payment of its regular quarterly dividend of $0.30 per     common share to be paid on September 19, 2014 to shareholders of record on     August 29, 2014         oThe third quarter 2014 per share regular dividend of $0.30 represents          a 114% increase from the third quarter 2013 regular dividend of $0.14          per share and an increase of 77% from the second quarter 2014 regular          dividend of $0.17 per share    oUnder Cogent's return of capital program, Cogent purchased 522,000 shares     of its common stock for $17.9 million during Q2 2014 at an average price     of $34.27 per share   oCogent's board approves an additional $50.0 million under its stock     buyback program   oEBITDA, as adjusted, for Q2 2014 of $33.5 million – an increase of 13.0%     from $29.6 million for Q2 2013 and an increase of 4.3% from $32.1 million     for Q1 2014   oEBITDA, as adjusted, margin increased 90 basis points from 34.5% for Q2     2013 to 35.4% for Q2 2014 and increased 80 basis points from 34.6% for Q1     2014   oLegal fees included in SG&A and associated with defending net neutrality     increased by $1.1 million from Q2 2013 to Q2 2014   oCogent issued $200.0 million of senior unsecured notes and repaid its     $92.0 million of convertible notes at par   oCash and cash equivalents were $349.8 million at June 30, 2014   oThere were 2,057 buildings on the Cogent network at the end of Q2 2014   o43,287 customer connections were on the Cogent network at the end of Q2     2014 – an increase of 16.8% from 37,057 customer connections at the end of     Q2 2013 and increase of 3.2% from 41,947 customer connections at the end     of Q1 2014  Cogent Communications Holdings, Inc. (NASDAQ: CCOI) today announced service revenue of $94.6 million for the three months ended June 30, 2014, an increase of 10.3% from $85.8 million for the three months ended June 30, 2013 and an increase of 1.8% from $92.9 million for the three months ended March 31, 2014. The impact of foreign exchange positively impacted service revenue growth from Q2 2013 to Q2 2014 by $0.7 million and positively impacted service revenue growth from Q1 2014 to Q2 2014 by $0.1 million. On a constant currency basis, service revenue grew by 9.5% from Q2 2013 to Q2 2014 and grew by 1.7% from Q1 2014 to Q2 2014.  Cogent Communications Logo.  On-net service is provided to customers located in buildings that are physically connected to Cogent's network by Cogent facilities. On-net revenue was $70.4 million for the three months ended June 30, 2014; an increase of 12.3% over $62.7 million for the three months ended June 30, 2013 and an increase of 1.9% over $69.1 million for the three months ended March 31, 2014.  Off-net customers are located in buildings directly connected to Cogent's network using other carriers' facilities and services to provide the last mile portion of the link from the customers' premises to Cogent's network. Off-net revenue was $23.9 million for the three months ended June 30, 2014; an increase of 5.6% over $22.6 million for the three months ended June 30, 2013 and an increase of 1.5% over $23.5 million for the three months ended March 31, 2014.  Non-core services are legacy services, which Cogent acquired and continues to support but does not actively sell. Non-core revenue was $0.4 million for the three months ended June 30, 2014, $0.5 million for the three months ended June 30, 2013 and $0.4 million for the three months ended March 31, 2014.  Non-GAAP gross profit increased by 12.9% from $48.9 million for the three months ended June 30, 2013 to $55.1 million for the three months ended June 30, 2014 and increased 1.7% from $54.2 million for the three months ended March 31, 2014. Non-GAAP gross profit margin percentage was 58.3% for the three months ended June 30, 2014, 56.9% for the three months ended June 30, 2013 and 58.3% for the three months ended March 31, 2014.  Earnings before interest, taxes, depreciation and amortization (EBITDA), as adjusted, increased 13.0% from $29.6 million for the three months ended June 30, 2013 to $33.5 million for the three months ended June 30, 2014 and increased 4.3% from $32.1 million for the three months ended March 31, 2014. EBITDA, as adjusted, margin was 35.4% for the three months ended June 30, 2014, 34.5% for the three months ended June 30, 2013, and 34.6% for the three months ended March 31, 2014.  Basic and diluted net income per share was $0.03 for the three months ended June 30, 2014, $0.03 for the three months ended June 30, 2013 and $0.00 for the three months ended March 31, 2014.  Total customer connections increased 16.8% from 37,057 as of June 30, 2013 to 43,287 as of June 30, 2014 and increased 3.2% from 41,947 as of March 31, 2014. On-net customer connections increased 17.4% from 31,876 as of June 30, 2013 to 37,411 as of June 30, 2014 and increased 3.0% from 36,306 as of March 31, 2014. Off-net customer connections increased 16.0% from 4,728 as of June 30, 2013 to 5,486 as of June 30, 2014 and increased 4.6% from 5,244 as of March 31, 2014. Non-core customer connections were 390 as of June 30, 2014, 453 as of June 30, 2013 and 397 as of March 31, 2014.  The number of on-net buildings increased by 136 on-net buildings from 1,921 on-net buildings as of June 30, 2013 to 2,057 on-net buildings as of June 30, 2014 and increased by 33 on-net buildings from 2,024 on-net buildings as of March 31, 2014.  Quarterly Dividend and Dividend and Stock Buyback Plan Increases Approved  On August 6, 2014, Cogent's board approved a dividend of $0.30 per common share payable on September 19, 2014 to shareholders of record on August 29, 2014. The third quarter 2014 regular dividend of $0.30 per share represents a 114% increase from the third quarter 2013 regular dividend of $0.14 per share and an increase of 77% from the second quarter 2014 regular dividend of $0.17 per share.  On August 6, 2014 Cogent's board approved an additional $50.0 million under its stock buyback program to extend to February 2016. Approximately $9.3 million remained available under the previous stock buyback program; as a result, there is a total of $59.3 million available under the current program.  During the quarter ended June 30, 2014 Cogent purchased 522,000 shares of its common stock for $17.9 million at an average price per share of $34.27 under Cogent's return of capital program. Under Cogent's return of capital program, Cogent plans on returning additional capital to its shareholders each quarter through either stock buybacks or a special dividend or a combination of stock buybacks and a special dividend. The aggregate payment under this program will total at least $10.5 million each quarter and this amount is in addition to Cogent's regular quarterly dividend payments. Since the amount paid for stock buybacks in the second quarter was more than $10.5 million Cogent will not make a special dividend payment in the third quarter under the return of capital program. The return of capital program is planned to continue until Cogent's net debt to trailing twelve months EBITDA, as adjusted, ratio reaches 2.50.Cogent's net debt to trailing twelve months EBITDA, as adjusted, ratio was 1.99 at June 30, 2014 and was 1.86 at March 31, 2014.  The payment of any future dividends and any other returns of capital will be at the discretion of Cogent's board of directors and may be reduced, eliminated or increased and will be dependent upon Cogent's financial position, results of operations, available cash, cash flow, capital requirements and other factors deemed relevant by Cogent's board of directors.  Conference Call and Website Information  Cogent will host a conference call with financial analysts at 8:30 a.m. (ET) on August 7, 2014 to discuss Cogent's operating results for the second quarter of 2014 and to discuss Cogent's expectations for full year 2014. Investors and other interested parties may access a live audio webcast of the earnings call in the "Events" section of Cogent's website at www.cogentco.com/events. A replay of the webcast, together with the press release, will be available on the website following the earnings call.  About Cogent Communications  Cogent Communications (NASDAQ: CCOI) is a multinational, Tier 1 facilities-based ISP. Cogent specializes in providing businesses with high speed Internet access, Ethernet transport, and colocation services. Cogent's facilities-based, all-optical IP network backbone provides services in 190 markets globally.  Cogent Communications is headquartered at 1015 31st Street, NW, Washington, D.C. 20007. For more information, visit www.cogentco.com. Cogent Communications can be reached in the United States at (202) 295-4200 or via email at info@cogentco.com.  COGENT COMMUNICATIONS HOLDINGS,INC., AND SUBSIDIARIES Summary of Financial and Operational Results                 Q1 2013    Q2 2013    Q3 2013    Q4 2013    Q1 2014    Q2 2014 Metric ($ in 000's, except share and per share data) – unaudited On-Net revenue $61,678    $62,693    $64,548    $66,032    $69,087    $70,409  % Change from previous  2.1%       1.6%       3.0%       2.3%       4.6%       1.9% Qtr. Off-Net        $22,309    $22,604    $22,767    $23,438    $23,498    $23,859 revenue % Change from  3.1%       1.3%       0.7%       2.9%       0.3%       1.5% previous Qtr. Non-Core       $566       $506       $446       $389       $352       $355 revenue (1)  % Change from previous  -3.4%      -10.6%     -11.9%     -12.8%     -9.5%      0.9% Qtr. Service revenue –      $84,553    $85,803    $87,761    $89,859    $92,937    $94,623 total  % Change from previous  2.3%       1.5%       2.3%       2.4%       3.4%       1.8% Qtr. Network operations     $37,154    $36,950    $37,327    $38,288    $38,723    $39,491 expenses (2) % Change from  -0.9%      -0.5%      1.0%       2.6%       1.1%       2.0% previous Qtr. Non-GAAP gross $47,399    $48,853    $50,434    $51,571    $54,214    $55,132 margin (2) % Change from  5.0%       3.1%       3.2%       2.3%       5.1%       1.7% previous Qtr. Non-GAAP gross margin         56.1%      56.9%      57.5%      57.4%      58.3%      58.3% percentage (2) Selling, general and    $19,106    $19,215    $19,772    $20,937    $24,392    $24,380 administrative expenses (3)  % Change from previous  10.4%      0.6%       2.9%       5.9%       16.5%      0.0% Qtr. Depreciation and            $15,874    $15,900    $16,024    $16,562    $17,204    $17,301 amortization expense % Change from  -1.6%      0.2%       0.8%       3.4%       3.9%       0.6% previous Qtr. Equity-based compensation   $2,514     $2,137     $2,061     $2,007     $2,006     $1,873 expense % Change from  -0.7%      -15.0%     -3.6%      -2.6%      0.0%       -6.6% previous Qtr. Operating     $9,905     $11,601    $12,577    $12,065    $12,907    $14,309 income % Change from  8.0%       17.1%      8.4%       -4.1%      7.0%       10.9% previous Qtr. Net income     $361       $1,607     $2,122     $52,599    $125       $1,208 Basic net income per    $0.01      $0.03      $0.05      $1.14      $0.00      $0.03 common share Diluted net income per    $0.01      $0.03      $0.05      $1.10      $0.00      $0.03 common share Weighted average common 45,537,607 46,040,692 46,171,194 46,302,926 46,409,735 45,897,449 shares – basic % Change from  0.1%       1.1%       0.3%       0.3%       0.2%       -1.1% previous Qtr. Weighted average common 46,435,677 46,769,184 46,823,167 48,800,560 46,907,360 46,294,966 shares – diluted % Change from  2.1%       0.7%       0.1%       4.2%       -3.9%      -1.3% previous Qtr. EBITDA, as     $28,295    $29,638    $30,703    $31,548    $32,117    $33,483 adjusted (4)  % Change from previous  -0.9%      4.7%       3.6%       2.8%       1.8%       4.3% Qtr. EBITDA, as adjusted       33.5%      34.5%      35.0%      35.1%      34.6%      35.4% margin (4) Net cash provided by    $14,962    $22,703    $14,898    $29,288    $10,636    $28,395 operating activities % Change from  -53.7%     51.7%      -34.4%     96.6%      -63.7%     167.0% previous Qtr. Capital        $16,316    $12,455    $10,165    $10,095    $15,623    $15,985 expenditures  % Change from previous  58.6%      -23.7%     -18.4%     -0.7%      54.8%      2.3% Qtr. Customer Connections – end of period On-Net         30,914     31,876     33,310     34,671     36,306     37,411  % Change from previous  3.5%       3.1%       4.5%       4.1%       4.7%       3.0% Qtr. Off-Net        4,591      4,728      4,886      5,088      5,244      5,486 % Change from  2.8%       3.0%       3.3%       4.1%       3.1%       4.6% previous Qtr. Non-Core (1)   463        453        443        415        397        390  % Change from previous  -1.7%      -2.2%      -2.2%      -6.3%      -4.3%      -1.8% Qtr. Total          35,968     37,057     38,639     40,174     41,947     43,287  % Change from previous  3.3%       3.0%       4.3%       4.0%       4.4%       3.2% Qtr. Other – end of period Buildings      1,890      1,921      1,955      1,990      2,024      2,057 On-Net Employees      619        633        673        706        724        760 (1) Consists of legacy services of companies whose assets or businesses were acquired by Cogent, primarily including voice services (only provided in Toronto, Canada). (2) Network operations expense excludes equity-based compensation expense of $155, $126, $114, $112, $113 and $114 in the three month periods ended March 31, 2013 through June 30, 2014, respectively. Non-GAAP gross margin represents service revenue less network operations expense, excluding equity-based compensation and amounts shown separately (depreciation expense). (3) Excludes equity-based compensation expense of $2,359, $2,011, $1,947, $1,895, $1,893 and $1,759 in the three month period ended March 31, 2013 through June 30, 2014, respectively. (4) See schedule of non-GAAP metrics below for definition and reconciliation to GAAP measures. EBITDA, as adjusted, includes net gains (losses) from asset related transactions of $2, $41, $914, $2,295 and $2,731 in the three months ended March 31, 2013 and September 30, 2013, December 31, 2013, March 31, 2014 and June 30, 2014, respectively.  Schedule of Non-GAAP Measures  EBITDA and EBITDA, as adjusted  EBITDA represents net cash flows from operating activities plus changes in operating assets and liabilities, cash interest expense and income tax expense. Management believes the most directly comparable measure to EBITDA calculated in accordance with generally accepted accounting principles in the United States, or GAAP, is cash flows provided by operating activities.  EBITDA, as adjusted, represents EBITDA plus net gains (losses) on asset related transactions. The Company believes EBITDA, as adjusted, is a useful measure of its ability to service debt, fund capital expenditures and expand its business. EBITDA, as adjusted, is an integral part of the internal reporting and planning system used by management as a supplement to GAAP financial information. The Company also believes that EBITDA is a frequently used measure by securities analysts, investors, and other interested parties in their evaluation of issuers.  EBITDA and EBITDA, as adjusted, are not recognized terms under GAAP and accordingly, should not be viewed in isolation or as a substitute for the analysis of results as reported under GAAP, but rather as a supplemental measure to GAAP. For example, EBITDA is not intended to reflect the Company's free cash flow, as it does not consider certain current or future cash requirements, such as capital expenditures, contractual commitments, and changes in working capital needs, interest expenses and debt service requirements. The Company's calculations of EBITDA and EBITDA, as adjusted, may also differ from the calculation of EBITDA and EBITDA, as adjusted, by its competitors and other companies and as such, its utility as a comparative measure is limited.  COGENT COMMUNICATIONS HOLDINGS,INC., AND SUBSIDIARIES EBITDA, as adjusted, is reconciled to cash flows provided by operating activities in the table below.                               Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014                                                                    ($ in 000's) – unaudited Net cash flows provided by   $14,962  $22,703 $14,898 $29,288 $10,636 $28,395 operating activities Changes in operating assets  5,365    (1,446) 6,771   (8,158) 9,048   (10,061) and liabilities Cash interest expense and    7,966    8,381   8,993   9,504   10,138  12,418 income tax expense Gains on asset related       2        -       41      914     2,295   2,731 transactions EBITDA, as adjusted          $28,295  $29,638 $30,703 $31,548 $32,117 $33,483    Impact of foreign currencies ("constant currency" impact) on change in sequential quarterly service revenue  ($ in 000's) – unaudited                                  Q2 2014 Service revenue, as reported – Q2 2014                    $94,623 Impact of foreign currencies on service revenue           (70) Service revenue - Q2 2014, as adjusted (1)               $94,553 Service revenue, as reported – Q1 2014                    $92,937 Constant currency increase from Q1 2014 to Q2 2014 - (Service revenue,                                         $1,616 as adjusted for Q2 2014 less service revenue, as reported for Q1 2014) Percent increase (Constant currency increase from Q1 2014 to Q2 2014                                                1.7% divided by service revenue, as reported for Q1 2014) (1) Service revenue, as adjusted, is determined by translating the service revenue for the three months ended June 30, 2014 at the average foreign currency exchange rates for the three months ended March 31, 2014. The Company believes that disclosing quarterly revenue growth without the impact of foreign currencies on service revenue is a useful measure of revenue growth. Service revenue, as adjusted, is an integral part of the internal reporting and planning system used by management as a supplement to GAAP financial information.    Impact of foreign currencies ("constant currency" impact) on change in prior year quarterly service revenue  ($ in 000's) – unaudited                                   Q2 2014 Service revenue, as reported – Q2 2014                     $94,623 Impact of foreign currencies on service revenue            (653) Service revenue - Q2 2014, as adjusted (2)                $93,970 Service revenue, as reported – Q2 2013                     $85,803 Constant currency increase from Q2 2013 to Q2 2014 - (Service revenue, as                                       $8,167 adjusted for Q2 2014 less service revenue, as reported for Q2 2013) Percent increase (Constant currency increase from Q2 2013 to Q2 2014 divided                                         9.5% by service revenue, as reported for Q2 2013) (2) Service revenue, as adjusted, is determined by translating the service revenue for the three months ended June 30, 2014 at the average foreign currency exchange rates for the three months ended June 30, 2013. The Company believes that disclosing quarterly revenue growth without the impact of foreign currencies on service revenue is a useful measure of revenue growth. Service revenue, as adjusted, is an integral part of the internal reporting and planning system used by management as a supplement to GAAP financial information.  Net debt to trailing 12 months EBITDA, as adjusted, ratio  Under Cogent's return of capital program Cogent plans on returning an additional at least $10.5 million to its shareholders each quarter through either stock buybacks or a special dividend or a combination of stock buybacks and a special dividend. The aggregate payment under this program will total at least $10.5 million each quarter and this amount is in addition to Cogent's regular quarterly dividend payments. The program is planned to continue until Cogent's net debt to trailing twelve months EBITDA, as adjusted, ratio reaches 2.50.Cogent's net debt to trailing twelve months EBITDA, as adjusted, ratio was 1.86 at March 31, 2014 and 1.99 at June 30, 2014 as shown below.  ($ in 000's) – unaudited              As of March 31, 2014 As of June 30, 2014 Cash and cash equivalents             $263,747             $349,835 Debt Capital leases – current portion      8,121                8,341 Convertible notes – par value         91,978               - Capital leases – long term            154,233              155,899 Senior unsecured notes                -                    200,000 Senior secured notes – par value      240,000              240,000 Total debt                            494,332              604,240 Total net debt                        230,585              254,405 Trailing 12 months EBITDA, as         124,006              127,851 adjusted Total net debt to trailing 12 months  1.86                 1.99 EBITDA, as adjusted  Cogent's SEC filings are available online via the Investor Relations section of www.cogentco.com or on the Securities and Exchange Commission's website at www.sec.gov.      COGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIES  CONDENSED CONSOLIDATED BALANCE SHEETS  AS OF JUNE 30, 2014 AND DECEMBER 31, 2013  (IN THOUSANDS, EXCEPT SHARE DATA)                                                  June30,       December31,                                                  2014           2013                                                  (Unaudited) Assets Current assets: Cash and cash equivalents                        $   349,835    $    304,866 Accounts receivable, net of allowance for doubtful accounts of $1,817 and $1,871,          33,505         30,628  respectively Prepaid expenses and other current assets        22,481         18,777 Total current assets                             405,821        354,271 Property and equipment, net                      353,663        341,193 Deferred tax assets - noncurrent                 50,122         50,861 Deposits and other assets - $447 and $448        13,181         8,776 restricted, respectively Total assets                                     $   822,787    $    755,101 Liabilities and stockholders' equity Current liabilities: Accounts payable                                 $   16,969     $    14,098 Accrued liabilities                              34,754         31,465 Convertible senior notes - current portion, net  —              88,879 of discount of $3,099 (Note 3) Current maturities, capital lease obligations    8,341          9,252 Total current liabilities                        60,064         143,694 Senior secured notes including premium of        244,835        245,423 $4,835 and $5,423, respectively Senior unsecured notes                           200,000        — Capital lease obligations, net of current        155,899        152,527 maturities Other long term liabilities                      21,367         19,965 Total liabilities                                682,165        561,609 Commitments and contingencies: Stockholders' equity: Common stock, $0.001 par value; 75,000,000 shares authorized; 46,466,355 and                46             47  47,334,218 shares issued and outstanding, respectively Additional paid-in capital                       480,794        508,256 Accumulated other comprehensive income —         1,630          2,136 foreign currency translation Accumulated deficit                              (341,848)      (316,947) Total stockholders' equity                       140,622        193,492 Total liabilities and stockholders' equity       $   822,787    $    755,101 COGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIES  CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME  FOR THE THREE MONTHS ENDED JUNE 30, 2014 AND JUNE 30, 2013  (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)                                                  ThreeMonths   ThreeMonths                                                  Ended          Ended                                                  June30,2014  June30,2013                                                  (Unaudited)    (Unaudited) Service revenue                                  $   94,623     $    85,803 Operating expenses: Network operations (including $114 and $126 of equity-based compensation expense,               39,605         37,076  respectively, exclusive of depreciation and amortization shown separately below) Selling, general, and administrative (including $1,759 and $2,011 of equity-based                26,139         21,226  compensation expense, respectively) Gains on equipment transactions                  (2,731)        — Depreciation and amortization                    17,301         15,900 Total operating expenses                         80,314         74,202 Operating income                                 14,309         11,601 Interest income and other, net                   268            589 Interest expense                                 (13,790)       (10,216) Income before income taxes                       787            1,974 Income tax benefit (provision)                   421            (367) Net income                                       $   1,208      $    1,607 Comprehensive income: Net income                                       $   1,208      $    1,607 Foreign currency translation adjustment          (44)           326 Comprehensive income                             $   1,164      $    1,933 Net income per common share: Basic and diluted net income per common share    $   0.03       $    0.03 Dividends declared per common share              $   0.17       $    0.13 Weighted-average common shares - basic           45,897,449     46,040,692 Weighted-average common shares - diluted         46,294,966     46,769,184 COGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIES  CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME  FOR THE SIX MONTHS ENDED JUNE 30, 2014 AND JUNE 30, 2013  (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)                                                  SixMonths     SixMonths                                                  Ended          Ended                                                  June30,2014  June30,2013                                                  (Unaudited)    (Unaudited) Service revenue                                  $   187,560    $    170,357 Operating expenses: Network operations (including $227 and $281 of equity-based compensation expense,               78,442         74,385  respectively, exclusive of depreciation and amortization shown separately below) Selling, general, and administrative (including $3,651 and $4,370 of equity-based                52,423         42,691  compensation expense, respectively) Gains on equipment transactions                  (5,026) Depreciation and amortization                    34,505         31,774 Total operating expenses                         160,344        148,850 Operating income                                 27,216         21,507 Interest income and other, net                   404            1,245 Interest expense                                 (25,092)       (20,084) Income before income taxes                       2,528          2,668 Income tax provision                             (1,195)        (700) Net income                                       $   1,333      $    1,968 Comprehensive income: Net income                                       $   1,333      $    1,968 Foreign currency translation adjustment          (506)          (1,467) Comprehensive income                             $   827        $    501 Net income per common share: Basic and diluted net income per common share    $   0.03       $    0.04 Dividends declared per common share              $   0.56       $    0.25 Weighted-average common shares - basic           46,200,844     46,028,855 Weighted-average common shares - diluted         46,648,415     46,842,136 COGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIES  CONSOLIDATED STATEMENTS OF CASH FLOWS  FOR THE SIX MONTHS ENDED JUNE 30, 2014 AND JUNE 30, 2013  (IN THOUSANDS)                                                  Sixmonths     Sixmonths                                                  Ended          Ended                                                  June30,2014  June30,2013                                                  (Unaudited)    (Unaudited) Cashflowsfromoperatingactivities: Net income                                       $   1,333      $    1,968 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization                    34,505         31,774 Amortization of debt discount and premium        2,555          3,193 Equity-based compensation expense (net of        3,878          4,651 amounts capitalized) Losses (gains) - dispositions of assets and      (4,959)        123 other, net Deferred income taxes                            772            204 Changes in operating assets and liabilities: Accounts receivable                              (2,970)        (3,409) Prepaid expenses and other current assets        (3,678)        (4,693) Accounts payable, accrued liabilities and other  7,822          3,647 long-term liabilities Deposits and other assets                        (227)          207 Net cash provided by operating activities        39,031         37,665 Cash flows from investing activities: Purchases of property and equipment              (31,608)       (28,771) Proceeds from dispositions of assets             92             2 Net cash used in investing activities            (31,516)       (28,769) Cash flows from financing activities: Dividends paid                                   (26,234)       (11,634) Purchases of common stock                        (32,084)       — Repayment of convertible senior notes            (91,978)       — Net proceeds from issuance of senior unsecured   195,824        — notes Proceeds from exercises of stock options         301            737 Principal payments of capital lease obligations  (8,146)        (7,045) Net cash provided by (used in) financing         37,683         (17,942) activities Effect of exchange rates changes on cash         (229)          (904) Net increase (decrease) in cash and cash         44,969         (9,950) equivalents Cash and cash equivalents, beginning of period   304,866        247,285 Cash and cash equivalents, end of period         $   349,835    $    237,335 Supplemental disclosure of non-cash financing activities: Non-cash component of network equipment          $   4,900      $    — obtained in exchange transactions Capital lease obligations incurred               $   7,671      $    21,224    Except for historical information and discussion contained herein, statements contained in this release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to statements identified by words such as "believes," "expects," "anticipates," "estimates," "intends," "plans," "targets," "projects" and similar expressions. The statements in this release are based upon the current beliefs and expectations of Cogent's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. Numerous factors could cause or contribute to such differences, including future economic instability in the global economy or a contraction of the capital markets which could affect spending on Internet services and our ability to engage in financing activities; the impact of changing foreign exchange rates (in particular the Euro to USD and Canadian dollar to USD exchange rates) on the translation of our non-USD denominated revenues, expenses, assets and liabilities; legal and operational difficulties in new markets; the imposition of a requirement that we contribute to the U.S. Universal Service Fund and similar funds in other countries; changes in government policy and/or regulation, including net neutrality rules by the United States Federal Communications Commission and in the area of data protection; increasing competition leading to lower prices for our services; our ability to attract new customers and to increase and maintain the volume of traffic on our network; the ability to maintain our Internet peering arrangements on favorable terms; our reliance on an equipment vendor, Cisco Systems Inc., and the potential for hardware or software problems associated with such equipment; the dependence of our network on the quality and dependability of third-party fiber providers; our ability to retain certain customers that comprise a significant portion of our revenue base; the management of network failures and/or disruptions; and outcomes in litigation as well as other risks discussed from time to time in our filings with the Securities and Exchange Commission, including, without limitation, our annual report on Form 10-K for the fiscal year endedDecember 31, 2013 and our quarterly report on Form 10-Q for the quarter ended June 30, 2014 to be filed with the Securities and Exchange Commission. Cogent undertakes no duty to update any forward-looking statement or any information contained in this press release or in other public disclosures at any time.    Logo - http://photos.prnewswire.com/prnh/20020204/DCM032LOGO  SOURCE Cogent Communications Holdings, Inc.  Website: http://www.cogentco.com Contact: Cogent Contacts: For Public Relations: Travis Wachter, + 1 (202) 295-4217, twachter@cogentco.com; For Investor Relations: John Chang, + 1 (202) 295-4212, investor.relations@cogentco.com  
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